On Capitol Hill, legislators are working to pass a Transportation Appropriations bill that will fund aviation programs during the 2015 fiscal year. As part of the appropriations process, members of the House and Senate are looking at a number of amendments that impact aviation. This includes continuing debate on limiting the Department of Transportation’s ability to approve the controversial application filed by Norwegian Airlines International (reported in last month’s Cozen O’Connor Aviation Regulatory Update) to operate to the United States and whether to allow Burbank’s Bob Hope Airport to impose a nighttime curfew on airline operations. Congress is also considering legislation to require DOT to amend its full-fare advertising rules to allow airlines to separately list taxes and fees paid by consumers; reauthorization of the Export-Import Bank and its loan guarantee programs for foreign carriers purchasing Boeing aircraft; whether airline industry consolidation has reduced competition; airport infrastructure financing and the potential increase of the maximum amount of passenger facility charges that may be collected; and the FAA’s progress in implementing NextGen and integrating unmanned aircraft into the National Airspace System. There are considerable obstacles to getting a Transportation Appropriations bill passed before the start of the fiscal year, with only a few weeks of legislative sessions remaining until the month-long Congressional recess followed by election-year activities that could grind Congress to a halt.

Congressional Action Impacting Aviation

Proposed Amendment to Impose Curfew at Burbank Airport

California Congressmen Adam Schiff, Brad Sherman and Henry Waxman have drafted an amendment to the Transportation, Housing and Urban Development appropriations bill that would allow Burbank’s Bob Hope Airport to impose a nighttime curfew between 10 p.m. and 7 a.m. The amendment was defeated in the House in June by a narrow 212-208 vote, but the congressmen hope that Senator Diane Feinstein (D-Calif.) will include the amendment in the Senate version of the Transportation Appropriations legislation. Airlines, private aircraft operator groups, pilots unions and aviation manufacturer groups oppose the amendment, contending it would harm business and violate the 1990 Airport Noise and Capacity Act.

House Aviation Subcommittee Holds Hearing on Airport Financing and Development

The House Transportation and Infrastructure Committee’s Aviation Subcommittee held a hearing on June 18 to discuss airport financing and development. Todd Hauptli, president and CEO of the American Association of Airport Executives (AAAE), provided testimony urging lawmakers to raise the maximum amount that can be charged airline passengers as Passenger Facility Charges (PFCs) from $4.50 to $8.50 and to index the PFC cap for inflation. Hauptli cited shrinking federal funding, increasing traffic levels at U.S. airports, and rising levels of congestion as justification for increased PFC funding. He also cited significant airport capital needs, which AAAE estimates at $71.3 billion between 2013 and 2017 or $14.3 billion annually. Mark Reis, chairman of Airports Council International-North America, also provided a statement echoing Hauptli’s request for an increased PFC amount. Sharon Pinkerton, senior vice president for legislative and regulatory policy for Airlines for America, countered the airport representatives’ contentions that increased PFC levels were necessary, asserting that current airport funding levels are sufficient and that airports have other funding sources aside from PFCs that they can draw on to meet their capital needs. She cautioned that increasing the PFC cap would weaken passenger demand, harm travel and tourism, potentially threaten air service to small communities, and undermine aviation industry job creation. The GAO also provided testimony on aviation activity trends at U.S. airports since 2007, airports' planned development costs, and federal funding and airport revenues.

On June 25, FAA Deputy Administrator Michael G. Whitaker provided testimony before the Senate Aviation Subcommittee on his agency’s progress on the implementation of NextGen. He marked off the FAA’s NextGen accomplishments, including the installation of ground infrastructure for Automatic Dependent Surveillance-Broadcast (ADS-B), which is necessary for the transition from a ground-based radar system to a satellite-based system, and software and hardware upgrades to high altitude air traffic centers and approach centers. Whitaker cautioned that for NextGen to succeed, airlines and general aviation operators “must do their part” and equip their aircraft to use the NextGen systems. Members of Congress and others have criticized the FAA’s slow progress in implementing NextGen.

Department of Transportation

Regulatory

Airlines Request Extended Time to Comment on Passenger Protection Rulemaking

Airlines for America, IATA and the Regional Airline Association filed a request on June 16 to extend the public comment period on DOT’s Passenger Protection Rulemaking for an additional 90 days. The airline associations cited the myriad proposed regulatory changes and DOT’s request for comments on more than 60 separate issues in the preamble alone as justification for an extension of the comment period. The current comment deadline is August 21.

DOT Issues Final Rule Expanding U.S. Air Carrier Reporting of Incidents Involving Transport of Animals

DOT published a final rule on July 3 that expands U.S. air carrier reporting requirements for incidents involving the loss, injury or death of animals during transport. Under the new rule, all U.S. carriers operating scheduled service with at least one aircraft designed to hold more than 60 seats will be required to report such incidents. Currently, only U.S. carriers that account for at least 1 percent of domestic scheduled passenger revenue are required to report. The rule also expands the definition of animal to include not only “any warm- or cold-blooded animal which, at the time of transportation, is being kept as a pet in a family household in the U.S.,” but also all cats and dogs transported by the carrier, regardless of whether the cat or dog is transported as a pet by its owner or as part of a commercial shipment. The rule requires for the first time that all covered carriers file a calendar-year report that includes the total number of animals transported in the calendar year and the total number of animals that were lost, injured or died during air transport in the calendar year, even if the carrier did not have any reportable incidents. The new requirements take effect on January 1, 2015, with the first annual reports due no later than January 15.

DOT Proposes to Dismiss Los Angeles Airport Fees and Charges Case

DOT issued a show cause order on July 1 proposing to dismiss, with prejudice, the joint complaint filed in 2007 by 22 foreign air carriers operating at the Tom Bradley International Terminal at Los Angeles International Airport. The carriers challenged the airport authority’s use of a new "rentable space" methodology that calculated airline charges based on a share of common areas, including public corridors, lobbies and restrooms, instead of basing the charges only on the terminal space actually occupied by the airlines. DOT proposed to dismiss the case because 20 of the carriers have signed rate agreements with the airport authority, one carrier has entered into an independent settlement agreement, and one carrier has entered into a partial settlement agreement and is in liquidation.

DOT Denies EU Carriers’ Part 382 Conflict of Law Waiver Requests

On June 13, DOT issued two letters denying conflict of law waiver requests filed by EU carriers regarding DOT’s Part 382 disabled passenger regulations. The first denial letter addressed the carriers’ request for a waiver from 14 C.F.R. Section 382.19, which prohibits them from refusing to provide air transportation to passengers with disabilities on the basis of their disabilities. The carriers cited Article 4(1) of Regulation (EC) No. 1107/2006 (EC 1107), which allows carriers to deny air transportation to disabled passengers if the size of the aircraft or its doors make embarkation or carriage of the disabled passengers physically impossible, as conflicting with § 382.19. DOT denied the waiver request, stating that under § 382.19, an airline can “legitimately decline to transport a passenger if the size of the aircraft or its doors makes the embarkation or carriage of the passenger physically impossible.” The second denial letter addressed the EU carriers’ request for a waiver from 14 C.F.R. Section 382.133, which requires airlines to allow disabled passengers to use in-flight passenger-supplied electronic respiratory devices as long as such use is consistent with applicable safety or security regulations. The carriers had cited EU-OPS, Subpart R, Art. 1.1155, which prohibits carriers from transporting dangerous goods unless approved by the relevant EU civil aviation authority, as sufficient reason to allow carriers to prohibit the use of such devices onboard aircraft. DOT rejected the carriers’ contention that electronic respiratory devices could be determined to be dangerous goods by EU authorities and noted that a soon-to-be-implemented EU regulation allows the use of such devices onboard aircraft.

Enforcement

On June 27, DOT issued a consent order assessing $150,000 in civil penalties against Alaska Airlines for violations of DOT’s code-share disclosure rules (14 C.F.R. Part 257). DOT alleged that reservations agents failed to disclose that certain Alaska Airlines flights were actually being operated by Horizon Air or SkyWest Airlines. In response, the carrier stated that it has taken steps to improve its call centers’ compliance with the Department’s code-share disclosure rules. Alaska Airlines was required to pay half of the penalty amount within 30 days, with the remainder to be paid only if additional code-share disclosure violations are committed by the carrier within the next year.

DOT Fines Delta Air Lines for Full Fare Advertising Violations

DOT also issued a consent order on July 9 imposing civil penalties of $100,000 on Delta Air Lines for violating DOT’s full fare advertising requirements. Allegedly, Delta advertised Fare Specials on its website that failed to “clearly and conspicuously” note that the advertised fares were each way fares requiring a roundtrip purchase. Delta was required to pay half of the penalty amount within 30 days, with the remainder to be paid only if additional full fare advertising violations are committed by the carrier within the next year.

Federal Aviation Administration

Regulatory

DOT Inspector General Says FAA Is Significantly Behind Schedule in Safely Integrating Drones into National Airspace System

DOT’s Office of the Inspector General issued a report finding that the FAA is significantly behind schedule in meeting its congressional mandate to safely integrate unmanned aircraft systems (UASs) into the National Airspace System, chiefly due to “technological barriers” that limit the ability of UASs to detect and avoid other air traffic, the FAA’s failure to establish a regulatory framework for UAS integration, and the agency’s inability to effectively collect and analyze UAS safety data or manage oversight of UAS operations. The report cautions that these delays will prevent the FAA from meeting Congress’s September 2015 deadline for safe UAS integration.

FAA Issues Legal Interpretations Regarding the Use of Model Aircraft by Individuals for Recreation and Use of Drones by Universities for Aeronautical Research

The FAA’s Office of the Chief Counsel issued a legal interpretation on the use of model aircraft, clarifying that such aircraft must satisfy certain criteria to qualify as model aircraft and not be classified as a drone, and confirming the FAA’s authority to take enforcement action if a model aircraft operator endangers the safety of the National Airspace System. The FAA noted that to qualify as a model aircraft, the aircraft would need to be operated purely for recreational or hobby purposes and within the visual line of sight of the operator, and not be used by persons or companies for business purposes. The FAA also issued a legal interpretation regarding the use of drones by public universities for aeronautical research, contending that aeronautical research does not include just any research conducted using drones, but instead is more limited to research about aircraft and has at its core the development of aircraft and systems. The FAA also stated that government entities, including qualified state educational institutions, may use a drone to conduct aeronautical research that may be funded by a grant without the use being considered for a commercial purpose, provided that the results of the research belong to the state (university) and the research does not carry the property of another, including the entity funding the grant.

On July 9, Amazon.com applied for an exemption from the FAA to allow it to test drones outdoors near Seattle so that its Amazon Prime Air drones may one day deliver packages by air to consumers worldwide.

Enforcement

The FAA proposed a $295,750 civil penalty against SkyWest Airlines, alleging the carrier violated drug and alcohol testing regulations by failing to include more than 150 safety-sensitive employees in its random drug testing pool. The FAA also alleged that SkyWest failed to receive verified negative drug test results before hiring and transferring employees to safety-sensitive positions, as well as improperly subjecting employees who were not in safety-sensitive positions to post-accident drug tests and cancelling a return-to-duty test because it was not directly observed.

Transportation Security Administration

Regulatory

TSA Increases Passenger Civil Aviation Security Fee

The Transportation Security Administration (TSA) issued an interim final rule that increases the passenger civil aviation security service fee charged to airline passengers traveling on scheduled or public charter flights originating at U.S. airports. The fee increase was mandated by the Bipartisan Budget Act of 2013 (Pub. L. 113-67, 127 Stat. 1165), which was signed into law on December 26, 2013. The current fee of $2.50 per enplanement up to a maximum total fee per one-way trip of $5.00 is being changed to a single fee amount of $5.60 per one-way trip. A one-way trip is defined as “continuous air transportation, during which a stopover does not occur.” Under the rule, a layover of more than four hours constitutes a stopover (resulting in a new one-way trip and an additional fee of $5.60) for continental (lower 48 states and the District of Columbia) interstate or intrastate air transportation. A layover of more than 12 hours constitutes a stopover (resulting in a new one-way trip and an additional fee of $5.60) for non-continental (Alaska, Hawaii and U.S. territories) interstate or intrastate air transportation and for all foreign air transportation. The higher fee amount applies at the time air transportation is sold, not when the flight occurs. In order to provide the airline industry with enough time to make the necessary changes to reservations systems in order to collect the higher fee, the interim final rule takes effect on July 21, 2014. TSA also requested comments on the interim final rule, which are due August 19, 2014.

National Transportation Safety Board

President Obama Nominates Christopher Hart to be New NTSB Chairman

President Obama nominatedChristopher A. Hart to be chairman of the National Transportation Safety Board for a term of two years. He is currently serving as acting NTSB chairman.

Government Accountability Office

Responding to Congressional concerns regarding claims by U.S. airlines and labor unions that Eximbank loan guarantees for Boeing wide-body aircraft provide competitive advantages to foreign airlines, the Government Accountability Office (GAO) released a report finding that Eximbank currently has 28 percent ($32 billion) of its total financial exposure dedicated to wide-body aircraft financing, with the United Arab Emirates, South Korea and India accounting for more than $3 billion each between 2004 and 2013. In each of an additional seven countries, buyers received in aggregate between $1.5 and $3 billion. The report states that Eximbank loan guarantees assisted in financing 789 Boeing large commercial aircraft between 2008 and 2013.

GAO Issues Report on Airline Competition

The GAO issued a Report on Airline Competition that found that although 85 percent of passengers in the United States flew on only 4 domestic airlines last year due to airline industry consolidation, the average number of competing airlines in individual markets serving the majority of those passengers has changed very little since 2007. The GAO report shows that recent airline mergers have created larger networks and new connections in some markets, and that low-cost carriers have expanded, adding new competitors into some of the larger markets. The report looks at changes in the financial health of the U.S. airline industry, recent market structure changes, the impact on consumers posed by these changes, and recommendations on how the U.S. government can address the key challenges to airline competition.

GAO Reports on the FAA’s Implementation of the Safety Management System

The GAO also published a report on the FAA’s oversight and implementation of its Safety Management System (SMS) that collects and analyzes safety data to identify hazards, manage risks and take corrective action before aviation accidents occur. The report identified industry concerns regarding the FAA’s plans for SMS oversight, the adequacy of FAA inspector training, and the potential for FAA inspectors to inconsistently interpret SMS regulations. The FAA plans to issue a final rule in September 2014 requiring commercial air carriers to implement SMS, but the agency has delayed the development of a final rule for airport SMS implementation and sources say the FAA has not yet decided if it will propose SMS rules for other industry sectors. The report contends that without adequate oversight planning and inspector training, the FAA could be unprepared to meet its oversight responsibilities when final SMS rules are issued.

Notable Aviation-Related Court Action

The U.S. District Court in Oregon ruled that airline passengers’ inability to challenge their listing on TSA’s no-fly list is unconstitutional. Judge Anna J. Brown issued a decision on June 24 stating that the plaintiffs’ rights to procedural due process were violated when they were denied access to information used against them in adding their names to the government’s no-fly list and when they were provided no right to challenge any of the evidence the government claimed to have.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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